yank

Oil's Up and Down Ride

Article was absolute crap. No basis for any of the conclusions the author reached. Wishing for $20 oil is about as useful as wishing to become a billionaire. Nice but it ain't going to happen. The dollar bears over the past month or so have been "roasted alive". Burn baby burn!!!!!!!!!!!!!

Oil Traders Bullish; Analysts Aren't

No it isn't. We all have to come to grips with the fact that the "easy oil" is long gone. Gone too are the "good old days" of $20 oil. The "inflation" in operating costs for explorwers and drillers require a floor of $70 oil to be economically viable. When prices dip and remain below that threshold projects are either delayed or cancelled. I almost "lost my lunch" last week when Rex Tillerson (Exxon CEO) said oil demand would remain at depressed levels for 20 years. Now Rex is ordinarily one smart guy but he must have taken one too many puffs on the "bong". For oil demand to stay at these levels one of two things MUST happen:

1. At least a decade long global depression must occur.
2. Population growth rates in the "emerging markets" must either reverse or flatten out.

Sorry, I just don't see either of those things happening. I guess my main point is that demand will recover, OPEC will continue to restrain production to support prices, and Non-OPEC production will continue to lag.

Just my assessment as an investment advisor. I would go with the oil traders before the analysts any day. I don't think these analysts "know where their dick is."

Yank


On Oct 15 10:46 AM Ferdinand E. Banks wrote:

> This is an interesting article, and pedagogically valuable. I can
> understand why analysts are not bullish though. In the light of the
> international macroeconomy, the price of oil is too high

Will Oil Be the Last Asset Standing?

kmi:
you are missing the point entirely. Since 2000 the costs of E&P for the oil cos has risen over 75%. The main point is these costs are not going down anytime soon. The Saudi oil minister isn't kidding when he says he needs $70 oil to justfiy spending billions to expand refineries, drill more wells, etc. All of us need to stop living in the past. The days of cheap oil ($10-20) are gone. FOREVER. And I don't buy for one minute that $70 oil will halt a global economic recovery. We saw last year that growth continued well above the $100 level. Do you realize that $2.50/gallon adjusted for inflation is about .35 cents in 1973 dollars, which is right about what we were paying at the pump before the oil embargo. There is absolutely no proof that the Chinese (or anyone else for that matter except Brazilians) are "diversifying" away from oil. Most geology experts confirm that fossil fuels will remain the dominant energy source well into the middle of this century. Alternative energy is a pipedream. Deal with it.

Yank


On Aug 25 08:56 AM kmi wrote:

> Oil @ $70+ makes users look at alt energy sources. Sure you can argue
> that $70 is where it needs to be in order for producers to want to
> bring more product online but users will be looking at other sources,
> i.e. demand will fall (and is). This is not an economy that supports
> expensive energy; investment strategy is focused on decreasing costs
> and energy is a big one.
>
> Chinese may be buying more cars but they are also diversifying away
> from petroleum faster than the US; also during the last peak in energy
> prices China had an earthquake offline a lot of its NG production
> pressuring up oil (diesel), that's no longer the case.
>
> Nevermind the fact that the oil spike encouraged drilling and exploration
> and encouraged huge investments into renewables; I can't count how
> many major energy users have outfitted their installations with renewables
> since $147/barrel.
>
> I think oil buyers are trying to front run a turn around in the global
> economy but are stalling it instead. $70+ oil in these conditions
> does not allow users to reinvest in the economy just forces them
> to set aside capital and wait. Growth from $70/barrel? Optimism misplaced.
>
>
> Generally though I agree with your opinions in 2nd part of article.

Remember $20 Oil? Looks Like It's Coming Back

Saying oil will go back to $20 is like saying milk will go back to .79 cents a gallon. Not happening people! What do you think has happened to the E&P costs of oil cos since oil was last in the $20-25 range? They have almost doubled in price. Consequently oil cos simply have no incentive/ability to support a price as low as $20. And please stop with the idea of how "stimulative" $20 oil would be. Yeah, and $25,000 mortgages would stimulate homebuying too. But it's not going to happen. When will people learn that there is a huge difference between a temporary surplus in crude and the longer-term picture of "peak oil". Geez.

$20 Oil by Year's End?

oil will never drop to $20 ever. Period. All that non-OPEC supply everyone crows about is just running in place to meet CURRENT demand. And trust me at $20 oil there will be "massive" cuts in oil /nat gas production. All the bitching about "high" gas prices totally misses the point. Adjusted for inflation pump prices at $2.50/gallon equate out to about .40 cents/gallon in 1973 dollars. The point is that even at $3/gallon, oil is cheap. Geez people. This isn't rocket science.

Why Is Oil Creeping Back Up?

Yeah it's just terrible that energy investors have portfolios up 30% year-to-date. They are just crying in their beer. Wake up fool. Energy stocks are the only game in town right now.


On May 31 10:40 PM OilFinder wrote:

> "The flip-side to this argument is that these ups and downs in the
> oil market are simply market reactions to future expectations. Expectations
> of increased future demand may be driving the increases in oil prices
> . . ."
>
> Once again we have investors killing their own investment. In anticipation
> of future (not present) demand increases, investors drive up the
> price of oil. Of course this will have the unfortunate effect (for
> the investors) of killing the very demand increases they expected.
> It will also increase production. Both of which, in turn, will (eventually)
> kill the price of oil.
>
> Oh well, no matter. I rather enjoy the thought of idiotic investors
> losing their shirts on stupid bets.

Why Is Oil Creeping Back Up?

bernie sanders is a communist, comrade! Residing in the socialist republic of Vermont.


On May 31 08:55 AM john s. gordon wrote:

> as usual bernie sanders is one of the few voices of sanity.

Oil Drawdown Takes Traders by Surprise

Don't hold your breath on that one Henrique. And of course all the oil bears want us to believe that oil demand is being destroyed. Missed in yesterday's release by the IEA was the fact that they believe oil demand will drop 3% in 2010. Sounds like a lot doesn't it? It isn't. Not when oil producers have removed almost 1/3 of production from the market. And one other little tidbit about supposed demand declines. You can't have lower demand when all refined products report draws across the board (yesterday's EIA report). Sorry, not mathematically possible.


On May 14 06:26 PM Henrique Simoes wrote:

> Good article.
>
> I am short oil and I have been posting my real time trading decisions
> in my blog.
>
> Underlying conditions will prevail, and oil will trade back down
> to the low fifities in a jifty.
>
> Regards

Surprising Upturn for the Energy Sector

The USD broke a key support level last week, closing below $83.45 It is headed below $80 which will onlu fuel more commodity buying. Hoping for a USD rebound is an exercise in futility.


On May 09 03:32 AM Alan von Altendorf wrote:

> I expect oil and natgas to move lower again. The pop was spillover
> from the financials. This whole market is starting to feel like a
> dollar devaluation hedge, which pushes up nominal USD prices.

Weak Fundamentals Suggest Oil Prices Will Remain Low

Oil is still expensive after falling 75% from its peak? Don't think so. If you look at $40-45 oil and adjust for inflation in 1973 (oil embargo) dollars we are paying the equivalent of $20/bbl oil. That doesn't sound expensive to me. The larger issue is that it would take several YEARS not just months of declining oil demand to keep oil below $40 bbl. I just don't see that happening. And of course with rigs being yanked from production as we speak it is inevitable that "supply destruction" will overun demand destruction resulting in higher prices.

Oil Responds to OPEC Supply Cuts

"Expect copper prices to fall until global economy recovers"
It's just not happening. Copper bottomed in Nov-Dec at $1.20. In case you hadn't noticed it is now well above $1.70 and not looking back. You are in a dream world if you expect copper to collapse now. That train has already "left the station."

Cacophony in the Oil Market

"Most oil stocks are overpriced at these levels (PEG)"
Really? When I see oil stocks like RIG, NOV and others trading at PEG ratios of 0.3 or 0.4 the LAST conclusion I would draw is that they are overvalued. These stocks are basically being given away and unlike banks which are insolvent, these companies are actually generating cash flow. You need a reality check.


On Feb 23 09:27 PM SeekingTruth wrote:

> In answer to your last question:
>
> Not really. We are in a Depression and unemployment levels have just
> not caught up to the facts yet, but they will. The stimulus package
> will let us down "less hard", and that's good, but it will not solve
> our fundamental ingrained problems.
>
> More factories, malls, will shut down, fewer long range driving miles,
> throw in a little conservation etc., reducing oil demand for at least
> two quarters and perhaps much longer.
>
> Short of massive supply disruptions due to hostile acts, and resulting
> panic buying, demand will also be under downward pressure for first
> half of 2009, perhaps longer "if" OPEC cheats too much on their supply
> cuts ( a true wild card).
>
> Falling Spot Oil prices,and Oil Co. stock prices are reflecting and
> discounting this quite accurately as I see it (finally, for a change).
>
> A broad stock market rally would buoy up oil stock prices to a degree,
> and for awhile, but would also make them more vulnerable to sharp
> corrections later if oil demand does not also support.
>
> "Most" (not all) Oil stocks are overpriced at these and lower oil
>
> prices (PEG, etc.). But as always, this is a fickle market , so never
> any guarantees, but that appears to be the way to bet (cautiously)for
> the next quarter or two at least, as I see things.
>
> Other views welcome, it's a fascinating market.

Crudomania Is Over

If we ever hit $9/bbl you can "turn the lights out" on the global economy. At $9 NO oil production makes any sense whatsoever. So if you were surprised to see the oilsands come to a screeching halt at $35, you ain't seen nothing yet. $9 is a sheer fantasy number and if it happens we will all be living in a cave somewhere.


On Jan 06 10:30 AM 1977°C wrote:

> I agree only with 10-20$ Oil as 40-75$ that you project seems weird
> long term.You all forgot that in 1997 Oil was 10-15$ and nobody cared,
> then in 2008 many WORLD'S TOP ANALYST were predicting 250$ in a matter
> of days and we all witnessed where it all finished, sorry, it is
> not over yet.
> I promise all of you, that till 2015 we will hit 9$ a barrell. <br/>Yeah,
> Oil is now 50$ and I make money both buying/selling it day by day,
> but I would never buy December 2017 Crude Oil at 80$, the market
> traders of all kind predict such a price for 2017 and I have no idea
> how they come into this 60% above now price call, but may I remind
> you that in 1999 longest dated futures then for December 2008 were
> tading, well at around 20-25$.

Three Items That Will Signal a Crude Recovery

It's not a 5% cut. It's actually closer to 9% according to Bloomberg.


On Jan 15 07:40 AM Perry1961 wrote:

> Crude oil imports dropped to $17.45 billion from $29.83 billion in
> October. The value of oil imports fell so sharply because prices
> plunged and use plummeted. The average price per barrel decreased
> by a record $25.30 to $66.72 from $92.02. The volume of oil imported
> declined to 261.60 million barrels from 324.19 million.
>
> online.wsj.com/article...
>
>
> Japan Oil Imports Fall 17% as Recession Damps Demand
>
> www.bloomberg.com/apps...;sid=aARtW1Jc4QZo
>
>
> The 5% cut OPEC is trying to implement is obviously a drop in the
> bucket.

60 Minutes on Oil: Did Anyone Verify Anything?

Michael:
All fair points except there is one small problem. NONE of the "supply" you mention is possible to be economically developed unless oil prices are above $60 and ng prices are in the $7-8 bcf range. So talking about all these wonderful solutions is really useless unless it is economical to develop them.

Yank


On Jan 12 12:55 PM Michael66 wrote:

> I have posted this comment before and I will continue to post it.
>
>
> The oil companies and the speculators want us to believe the recent
> decrease in crude oil prices is simply due to a temporary decrease
> in demand. They want us to believe things will soon return to normal
> and the oil price will again increase.
>
> The decrease in the price of crude oil is not temporary. The fact
> of the matter is that the decline in price is primarily due to a
> rapid increase in the supply of many alternatives to crude oil. The
> decline is not temporary.
>
> Crude oil is being DISPLACED by the other energy sources which are
> rapidly arriving on the market. The DISPLACEMENT of demand for crude
> oil is occurring much more rapidly than the oil companies and the
> speculaors imagined.
>
> WHY CRUDE OIL PRICES WILL DECLINE:
> Recently OPEC reduced crude oil production twice over just a few
> months. There are five wars going on in Liberia, Mexico, Gaza, Iraq
> and Afghandistan. A year ago these events would have spiked the price
> of crude oil by at least $50.00 per barrel. Recently, oil price declined
> by a record daily amount.
>
> There are several reasons the price of oil is decreasing in the face
> of so much news. These reasons are:
>
> 1. New oil has been found in Canada, Montana, North &amp; South Dakota
> and in the ocean near Brazil. Each of these oil fields has more oil
> than Arabia. Canada is constructing several pipelines to deliver
> the oil to the US and to their west coast for shipment to Asia.<br/>
>
> 2. New natural gas has been found in Pennsylvania and West Virginia.
> This is the largest find in North America. Currently the total US
> gas production is 30 trillion cubic feet per day. The Pennsylvania/West
> Virginia gas field is expected to produce 50 trillion cubic feet
> per day or more. America’s gas production will soon triple.
>
> 3. New methods of injecting CO2 and surfactants into oil wells is
> being used to double their output.
>
> 4. Bio fuel is being produced from many plants and algae and production
> is beginning to reach critical mass. The production potential per
> acre in some cases is astounding. Many countries are racing to produce
> bio fuels.
>
> 5. Virtually every restaurant in the US and all food processing plants
> are now selling their used oil to bio-diesel producers. Every pork,
> cattle, turkey and chicken processing plant is selling their fat
> to bio-diesel producers. One pork processing plant in Oklahoma has
> an on premises bio diesel plant and is producing 30,000 gallons of
> bio-diesel per day from pork fat.
>
> 6. There are 99 nuclear reactors in various stages of construction
> around the world at this time. Several hundred more are expected
> to be built in the future. Much of the energy they produce will displace
> oil.
>
> 7. Every company in any form of transportaion business is replacing
> older equipment such as trucks, airplanes, train engines, ships,
> etc. with new more fuel efficient equipment. Airlines and railway
> companies are experiencing 20% to 25% better fuel econony with the
> new equipment.
>
> Airlines are flying airplanes with bio-fuel. They are finding the
> bio-fuel is cleaner and performs better than jet fuel. The US Air
> Force has been told to switch all its jets to bio fuels as soon as
> practical.
>
> 8. Cities and counties throughout the US are selling the rights to
> capture methane gas from landfills. This is a huge source of gas
> available at very little cost or risk. The gas is displacing crude
> oil.
>
> 9. Coal is being transformed into a clean burning liquid fuel. The
> CO2 produced as a byproduct is sold to oil companies for injection
> into oil wells.
>
> 10. Solar, wind and ocean energy is displacing oil as an energy source.
> Three new wind turbines are being erected every day in the US.<br/>
>
> 11. Methyl hydrates will one day soon be an enormous sourch of energy.
> There is more methyl hydrates deposits than ALL other fossil fuels
> in the world combined. The test wells to extract methyl hydrates
> are producing much more gas than anticipated. The researchers are
> quite excited about their progress so far.
>
> Each of the above by itself will not make a large difference in the
> price of crude oil but the sum of all of them together is world changing.
> The important thing is that OPEC and the speculators no longer have
> the ability to control oil prices as they have in the past.